Simon Stevens on an NHS budget showdown

Who gets what? Surely that is the essence of politics, and never more so than when times are tight. When a rising tide carries all boats, economic growth tends to obscure the question.

Recessions bring it into sharp relief. So as the NHS faces up to its biggest fiscal crunch in three decades, the stage is set for a grand showdown on the issue of how it doles out its budget across the country.

The biggest target in the crosshairs is the question of why English taxpayers should be subsidising Scottish public services. Notwithstanding that the chancellor of the exchequer for the past 12 years has been a Scot, many Cabinet ministers privately fail to see why working class Cockneys, Geordies or Scousers in their constituencies should be featherbedding public spending north of the border - to the tune of £1,100 or £1,600 a head, depending on how you calculate it.

After rejecting most of the recent policy innovation from England, Scotland has gone from a position of having comparatively better waiting times to having worse, so it is not obvious why English patients should be bailing out Scottish voters. (What does it tell you about the efficacy of the Scottish policy mix when, despite having better funding, more doctors, more inpatient beds and lower waiting times to start with, they now have worse waiting times than England?)

If the Scots want to strike different policy poses on free prescriptions, free hospital car parking, and free nursing home care, that is absolutely fine, but why should it be funded with subsidies from England?

Some of these questions are implicit in the recent report of the latest parliamentary committee to investigate the so-called Barnett formula - the mechanism used for the past three decades to allocate more than half of total public expenditure in Scotland, Wales and Northern Ireland.

The Lords select committee duly reported last month that inaccurate population estimates and the failure to take any account of relative need means the formula lacks validity and fairness. Instead it has led to systematic misallocation of resources between the four countries of the UK.

That is not to deny that there are many areas of high need outside England. But there are in fact more poor people in the richest regions of the UK than there are in the poorest regions.

While the Scots et al are getting a good deal under the current gerrymandered status quo, there is a reason why they might want to consider unhitching their wagons from the Barnett formula now. That is because it is a doubled edged financial sword. While they have automatically benefited from spending increases as English resources have grown, the reverse also applies. As and when spending goes down in England, it will trigger automatic and proportionate reductions in spending allocations to Scotland, Wales and Northern Ireland.

That is exactly what it was intended to do when introduced as a “short term fix” in 1978. Its author was Lord Joel Barnett, chief secretary to the Treasury in the last Labour government to find itself in similarly shark infested economic waters.

As the select committee records: “The purpose of the formula was to respond to pressure from ministers in other departments to rein in the excessive, as they saw it, share of resources going to the territorial departments, in particular to Scotland, at a time of cash limits and in dire economic circumstances nationally.”

The more things change the more they stay the same.

With different political parties in charge in Edinburgh, Cardiff, Belfast and London, differences in fiscal preference are more transparent. Good. That is democracy in action. Now we need to take the next step and allow local electorates to experience the tax consequences of the spending decisions their elected representatives take. Three-quarters of people in England support the idea that services in Scotland should be paid out of taxes collected in Scotland. The Institute for Public Policy Research claims 57 per cent of Scots agree with that.

Under the devolution settlement, the Scots have the power to raise their own “tartan” income tax up to 3p in the pound. They have not done this. Perhaps it is not so surprising: why face the explicit local political accountability when you can hide behind invisible cross border bail outs? It is time to give the people of Scotland the opportunity, and responsibility, to face up to the consequences of their own political preferences. That is the thrust of the Calman commission on Scottish tax raising powers.

But underlying these tax questions is a bigger constitutional headache: the so called West Lothian question. Is it time to insist Scottish MPs at Westminster desist from voting on legislation that purely affects English MPs and constituents?

Don’t expect movement on that topic this side of Glasgow North East by-election to replace ex-Commons speaker Michael Martin. Or indeed this side of a general election. But after that, all bets are off.

Long serving administrations tend to collect policy barnacles it takes a change of government to scrape off. David Cameron has no particular reason for favouring the status quo. Given a chance, will he do something about it? He has little to lose and quite a bit to gain.

Rob Webster on how West Yorkshire and Harrogate Health and Care Partnership has set out common points of agreement on its purpose, principles and approach and is working towards providing optimum healthcare to its people